Chrysler Posts Q2 Profit Jump, Cuts 2013 Outlook

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NEW YORK CITY, New York (AFP) – Chrysler Group on Tuesday posted a double-digit profit jump for the second quarter, boosted largely by U.S. vehicle sales, but lowered its 2013 outlook.

Net income totaled $507 million in the April-June period, a 16 percent increase from $436 million a year earlier.

Net revenues climbed 7 percent from a year ago to $17.99 billion.

Global vehicle sales came in at 643,000 for the second quarter, up 10 percent from a year ago and driven by a 17 percent jump in US retail sales.

Chrysler reported modified operating profit of $808 million, down from $755 in the 2012 second quarter. The decline in part reflected a $151 million charge for the safety recall of several models of Jeeps.

“Chrysler Group is poised for a very strong performance in the second half of the year, with the new Jeep Grand Cherokee and Ram 1500 pickup earning best-in-class recognition, and the all-new Jeep Cherokee now rolling off the line,” Chrysler Group chairman and chief executive Sergio Marchionne said in a statement.

Chrysler lowered its forecasts for 2013, penciling in net income between $1.7 and $2.2 billion, compared with a previous estimate of $2.2 billion.

It also revised downward its expected modified operating profit to a range between $3.3 and $3.8 billion, from $3.8 billion.

“Chrysler posted modest results. While the numbers showed some progress, they also indicate that the company is not a viable competitor to its much larger rivals,” said Douglas McIntyre of 24/7 Wall St.

“Unfortunately, Chrysler has a very modest line-up of cars when Jeep is factored out. Its sales are built almost entirely around its 200, 300 and Town & Country products. These are not enough for it to grapple with manufacturers that have two or three times that many models,” McIntyre said.

Excluding the Chrysler accounts, Fiat posted a net loss of 247 million euros, about the same amount as in the 2012 second quarter.

Fiat took control of Chrysler in 2009 after it emerged from a US court-supervised bankruptcy reorganization. The Italian automaker gained a majority stake in June 2011; the two groups operate separately.